Smurfit Westrock Returns to Profit as Costs Erode Margins
The packaging maker narrowed its full-year Adjusted EBITDA guidance to $4.9 billion to $5.1 billion, tightening a range it had set wider just one quarter earlier.
Smurfit Westrock (SW) posted net income of $88 million in the second quarter, reversing a $26 million loss a year earlier, as net sales rose 1.1% to $8.031 billion from $7.940 billion. The profit swing came even as the company's core profitability measure moved the other way: Adjusted EBITDA fell 6.0% to $1.140 billion from $1.213 billion in the prior-year quarter, attributed to higher input costs, particularly freight.
The divergence between rising sales and falling EBITDA has become the defining feature of Smurfit Westrock's recent quarters. Adjusted EBITDA margin has now compressed in four straight periods, from 16.3% in the third quarter of 2025 to 15.5%, then 14.0% in the first quarter of 2026, and 14.2% in the second. Gross profit margin told the same story, narrowing to 17.4% from 19.1% a year earlier as cost of goods sold climbed 3.2%, outpacing the 1.1% rise in sales.
Sequentially, the results showed some recovery. Net sales rose 4.1% from $7.712 billion in the first quarter, and Adjusted EBITDA climbed 6.0% from $1.076 billion over the same span. Adjusted basic earnings per share rose to $0.35 from $0.33 quarter over quarter but remained down 20% from $0.44 a year earlier. Net income margin followed the same pattern, improving to 1.1% from 0.8% in the first quarter but still well below the 3.1% posted in the third quarter of 2025.
Geography explained much of the pressure. North America, the company's largest segment, saw Adjusted EBITDA decline 6.4% to $704 million from $752 million, with margin compressing to 14.8% from 15.8%. EMEA/APAC moved the opposite direction, with EBITDA rising to $380 million from $372 million and margin holding flat at 13.4%, continuing to outperform the North American business. In Latin America, EBITDA dollars were roughly flat at $124 million versus $123 million, but margin slipped to 22.2% from 23.7%.
Operating cash flow fell to $765 million from $829 million a year earlier, though that marked a sharp rebound from just $204 million in the first quarter. Cash and equivalents declined to $677 million at June 30 from $892 million at the end of 2025, even as capital expenditures for the first six months of 2026 rose to $1.089 billion from $999 million in the prior-year period.
Smurfit Westrock guided third-quarter Adjusted EBITDA to approximately $1.3 billion, above the second quarter's $1.140 billion actual, and narrowed its full-year guidance to $4.9 billion to $5.1 billion from the $5.0 billion to $5.3 billion range it had given after the first quarter.
The company also disclosed an expanded restructuring effort, booking $119 million in impairment and restructuring costs in the quarter, down from $280 million a year earlier but tied to a broader program than previously outlined. Beyond the closure of a UK mill, Smurfit Westrock announced plans to close eight additional converting facilities across Europe and North America, a wider scope than the UK-only consultation disclosed after the first quarter.
The anchor release also dropped two disclosures that had appeared in earlier quarters: the $20-to-$50-per-ton containerboard price increases and $65 million weather-related EBITDA hit flagged after the first quarter, and the Adjusted Free Cash Flow figure the company had reported as recently as the fourth quarter of 2025 at $679 million. Their absence leaves fewer benchmarks against which investors can measure the pace of the company's cost recovery.